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Fuwei Films Announces Third Quarter of 2019 Unaudited Financial Results
Time:2019/11/29 15:48:20  Source:
Fuwei Films Announces Third Quarter of 2019 Unaudited Financial Results -Teleconference to be held on Wednesday, November 27, 2019 at 8:00 am ET- BEIJING, November 26, 2019 - Fuwei Films (Holdings) Co., Ltd. (Nasdaq: FFHL) (“Fuwei Films” or the “Company”), a manufacturer and distributor of high-quality BOPET plastic films in China, today announced its unaudited financial results for the three-month and nine-month periods ended September 30, 2019. Third Quarter 2019 Financial Highlights  Net sales were RMB79.6 million (US$11.1 million), compared to RMB86.9 million during the same period in 2018.  Sales of specialty films were RMB40.6 million (US$5.7 million) or 51.0% of total revenues as compared to RMB45.3 million or 52.2% of total revenues in the same period of 2018.  Overseas sales were RMB11.6 million (US$1.6 million) or 14.6% of total revenues, compared with RMB8.5 million or 9.8% of total revenues in the third quarter of 2018.  Gross profit was RMB21.6 million (US$3.0 million), representing a gross margin rate of 27.1%, as compared to gross profit of RMB17.1 million and a gross margin rate of 19.6% for the same period in 2018.  Net profit attributable to the Company was RMB3.4 million (US$0.5 million), compared to net loss attributable to the Company of RMB1.8 million during the same period in 2018, representing an increase in profit of RMB5.2 million. First Nine Months 2019 Financial Highlights  Net sales were RMB248.8 million (US$34.8 million), compared to RMB243.40 million, during the same period in 2018, representing an increase of RMB5.4 million or 2.2%.  Sales of specialty films were RMB114.7 million (US$16.0 million) or 46.1% of total revenues as compared to RMB109.0 million or 44.8% in the same period of 2018.  Overseas sales were RMB42.2 million (US$5.9 million) or 16.9% of total revenues, compared with RMB36.1 million or 14.8% of total revenues in the same period in 2018.  Gross profit was RMB52.6 million (US$7.4 million), representing a gross margin of 21.2%, as compared to a gross margin of 13.7% for the same period in 2018. Mr. Zengyong Wang, Chairman and CEO of Fuwei Films, commented, “Benefiting from our differentiated product strategy and continuous R&D, we are pleased to continue to operate profitably for the third quarter. Sales of specialty films stayed dominant in wholesales and accounted for 51% of total sales during the quarter. Looking ahead, the BOPET industry remains competitive as a result of higher supply. Nevertheless, we will continue to innovate, tackle overseas markets and execute our differentiated product strategy to improve performance and capture opportunities.” Financial Results for the Three Months Ended September 30, 2019 Net sales during the third quarter ended September 30, 2019 were RMB79.6 million (US$11.1 million), compared to RMB86.9 million during the same period in 2018. The decrease of average sales price caused a decrease of RMB4.6 million and the sales volume decrease caused a decrease of RMB2.7 million. In the third quarter of 2019, sales of specialty films were RMB40.6 million (US$5.7 million) or 51.0% of total revenues as compared to RMB45.3 million or 52.2% in the same period of 2018. The decrease in average sales price caused a decrease of RMB1.5 million and the decrease in the sales volume caused a decrease of RMB3.2 million. The following is a breakdown of commodity and specialty film sales (amounts in thousands): Three-Month Period Ended September 30, 2019 % of Total Three-Month Period Ended September 30, 2018 % of Total RMB US$ RMB Stamping and transfer film 26,552 3,715 33.3% 30,650 35.3% Printing film 7,881 1,103 9.9% 6,293 7.2% Metallization film 1,197 167 1.5% 773 0.9% Specialty film 40,559 5,674 51.0% 45,325 52.2% Base film for other application 3,397 475 4.3% 3,832 4.4% 79,586 11,134 100.0% 86,872 100.0% Overseas sales were RMB11.6 million or US$1.6 million, or 14.6% of total revenues, compared with RMB8.5 million or 9.8% of total revenues in the third quarter of 2018. The decrease in average sales price caused a decrease of RMB0.8 million and the increase in sales volume resulted in an increase of RMB3.9 million. The following is a breakdown of PRC domestic and overseas sales (amounts in thousands): Three-Month Period Ended September 30, 2019 % of Total Three-Month Period Ended September 30, 2018 % of Total RMB US$ RMB Sales in China 67,933 9,512 85.4% 78,369 90.2% Sales in other countries 11,593 1,622 14.6% 8,503 9.8% 79,586 11,134 100.0% 86,872 100.0% Gross profit was RMB21.6 million (US$3.0 million) for the third quarter ended September 30, 2019, representing a gross margin rate of 27.1%, compared to gross profit of RMB17.1 million and a gross margin rate of 19.6% for the same period in 2018. Correspondingly, gross margin rate increased by 7.5 percentage point compared to the same period in 2018. Operating expenses for the third quarter ended September 30, 2019 were RMB16.3 million (US$2.3 million), which was RMB1.5 million, or 8.4% lower than the same period in 2018. This decrease was mainly due to decreased expenses on research and development. Net profit attributable to the Company during the third quarter ended September 30, 2019 was RMB3.4million (US$0.5 million), compared to net loss attributable to the Company of RMB1.8 million during the same period in 2018, representing an increase in profit of RMB5.2 million. Financial Results for the Nine Months Ended September 30, 2019 Net sales during the nine-month period ended September 30, 2019 were RMB248.8 million (US$34.8 million), compared to RMB243.40 million, during the same period in 2018, representing an increase of RMB5.4 million or 2.2%, mainly due to the increase in sales prices in the first nine months of 2019. In the nine-month period ended September 30, 2019, sales of specialty films were RMB114.7 million (US$16.0 million) or 46.1% of total revenues as compared to RMB109.0 million or 44.8% in the same period of 2018, which was an increase of RMB5.7 million, or 5.2% as compared to the same period in 2018. The increase of average sales price in the first nine months of 2019 caused an increase of RMB1.8 million and the increase in the sales volume caused an increase of RMB3.9 million. The following is a breakdown of commodity and specialty film sales (amounts in thousands): Nine-Month Period Ended September 30, 2019 % of Total Nine-Month Period Ended September 30, 2018 % of Total RMB US$ RMB Stamping and transfer film 86,675 12,126 34.9% 90,930 37.3% Printing film 28,613 4,003 11.5% 23,874 9.8% Metallization film 3,811 533 1.5% 2,568 1.1% Specialty film 114,713 16,049 46.1% 109,020 44.8% Base film for other applications 14,965 2,094 6.0% 17,006 7.0% 248,777 34,805 100.0% 243,398 100.0% Overseas sales during the nine months ended September 30, 2019 were RMB42.2 million or US$5.9 million or 16.9% of total revenues, compared to RMB36.1 million or 14.8% of total revenues in the same period in 2018. This was RMB6.1 million higher than the same period in 2018. The increase in sales volume resulted in an increase of RMB4.7 million and the increase of average sales price caused an increase of RMB1.4 million. The following is a breakdown of PRC domestic and overseas sales (amounts in thousands): Nine-Month Period Ended September 30, 2019 % of Total Nine-Month Period Ended September 30, 2018 % of Total RMB US$ RMB Sales in China 206,625 28,907 83.1% 207,291 85.2% Sales in other countries 42,152 5,898 16.9% 36,107 14.8% 248,777 34,805 100.0% 243,398 100.0% Gross profit was RMB52.6 million (US$7.4 million) for the first nine months ended September 30, 2019, representing a gross margin of 21.2%, compared to a gross margin of 13.7% for the same period in 2018. Correspondingly, gross margin increased by 7.5 percentage. Average product sales prices increased by 2.2% compared to the same period last year while the average cost of goods sold decreased by 6.6% compared to the same period last year. This resulted in an increase in gross profit. Operating expenses for the nine months ended September 30, 2019 were RMB44.9 million (US$6.3 million), compared to RMB47.0 million in the same period in 2018, which was RMB2.1 million or 4.5% lower than the same period in 2018. This decrease was mainly due to decreased expenses on research and development. Net profit attributable to the Company during the first nine-month period of 2019 was RMB1.0 million (US$0.1 million) compared to net loss attributable to the Company of RMB18.7 million during the same period in 2018, representing an increase of RMB19.7 million from the same period in 2018 due to the factors described above. Cash, cash equivalent and restricted cash totaled RMB74.9 million or US$10.5 million as of September 30, 2019. Total shareholders’ equity was RMB197.9 million or US$27.7 million. As of September 30, 2019, the Company had 3,265,837 basic and diluted total ordinary shares outstanding. Conference Call Information The Company will host a teleconference on Wednesday, November 27, 2019, at 8:00 a.m. ET / 9:00 p.m. Beijing time to discuss the financial results. To participate in the call, please dial +1-844-369-8770 in North America, or +1-862-298-0840 internationally, approximately 10 minutes prior to the scheduled start time. A replay of the call can also be accessed via telephone by calling +1-877-481-4010 in North America, or +1-919-882-2331 internationally, and entering the following Conference ID: 56850. The replay will be available until December 27, 2019, at 8:00 a.m. ET. About Fuwei Films Fuwei Films develops, manufactures and distributes high-quality plastic films using the biaxial oriented stretch technique, also known as BOPET film. Fuwei's BOPET film is widely used to package food, medicine, cosmetics, tobacco, and alcohol, as well as in the imaging, electronics, and magnetic products industries. Safe Harbor This press release contains information that constitutes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to risks. Risk factors that could contribute to such differences include those matters more fully disclosed in the Company's reports filed with the U.S. Securities and Exchange Commission which, among other things, include the significant oversupply of BOPET films resulting from the rapid growth of the Chinese BOPET industry capacity, changes in the international market and trade barriers, especially the uncertainty of the antidumping investigation and imposition of an anti-dumping duty on imports of the BOPET films originating from the People’s Republic of China (“China”) conducted by certain countries; uncertainty around U.S.-China trade war and its effect on the Company’s operation, fluctuations of the RMB exchange rate, and our ability to obtain adequate financing for our planned capital expenditure requirements; uncertainty as to our ability to continuously develop new BOPET film products and keep up with changes in BOPET film technology; risks associated with possible defects and errors in our products; uncertainty as to our ability to protect and enforce our intellectual property rights; uncertainty as to our ability to attract and retain qualified executives and personnel; and uncertainty in acquiring raw materials on time and on acceptable terms, particularly in view of the volatility in the prices of petroleum products in recent years. The forward-looking information provided herein represents the Company's estimates as of the date of the press release, and subsequent events and developments may cause the Company's estimates to change. The Company specifically disclaims any obligation to update the forward-looking information in the future. Therefore, this forward-looking information should not be relied upon as representing the Company's estimates of its future financial performance as of any date subsequent to the date of this press release. Actual results of our operations may differ materially from information contained in the forward-looking statements as a result of the risk factors. For more information, please contact: In China: Ms Xiaoli Yu Investor Relations Officer Phone: +86-133-615-59266 Email: fuweiIR@fuweifilms.com In the U.S.: Mr. Shiwei Yin Investor Relations Grayling Phone: +1-646-284-9474 Email: shiwei.yin@grayling.com FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2019 AND DECEMBER 31, 2018 (amounts in thousands except share and per share value) (Unaudited) September 30, 2019 December 31, 2018 RMB US$ RMB ASSETS Current assets Cash and cash equivalents 50,217 7,026 8,908 Restricted cash 24,700 3,456 38,000 Accounts and bills receivable, net 23,596 3,301 22,627 Inventories 22,135 3,097 24,675 Advance to suppliers 10,527 1,473 5,694 Prepayments and other receivables 1,223 171 1,068 Deferred tax assets – current 1,169 164 1,195 Total current assets 133,567 18,688 102,167 Property, plant and equipment, net 310,101 43,385 331,168 Construction in progress - - 366 Lease prepayments, net 15,895 2,224 16,296 Advance to suppliers - long term, net 1,542 216 1,542 Deferred tax assets - non current 3,037 425 3,143 Total assets 464,142 64,938 454,682 LIABILITIES AND EQUITY Current liabilities Short-term borrowings 65,000 9,094 64,950 Due to related parties 118,149 16,530 114,692 Accounts payables 21,142 2,958 20,750 Notes payable 49,400 6,911 48,000 Advance from customers 4,306 602 1,859 Accrued expenses and other payables 5,941 831 5,072 Total current liabilities 263,938 36,926 255,323 Deferred tax liabilities 2,352 329 2,528 Total liabilities 266,290 37,255 257,851 Equity Shareholders’ equity Registered capital (of US$0.519008 par value; 5,000,000 shares authorized; 3,265,837 issued and outstanding) 13,323 1,864 13,323 Additional paid-in capital 311,907 43,637 311,907 Statutory reserve 37,441 5,238 37,441 Accumulated deficit (165,659) (23,177) (166,680) Cumulative translation adjustment 840 121 840 Total equity 197,852 27,683 196,831 Total liabilities and equity 464,142 64,938 454,682   FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) FOR THE THREE- AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2019 AND 2018 (amounts in thousands except share and per share value) (Unaudited) The Three-Month Period Ended September 30, The Nine-Month Period Ended September 30, 2019 2018 2019 2018 RMB US$ RMB RMB US$ RMB Net sales 79,586 11,134 86,872 248,777 34,805 243,398 Cost of sales 57,996 8,114 69,812 196,154 27,443 210,051 Gross profit 21,590 3,020 17,060 52,623 7,362 33,347 Operating expenses Selling expenses 3,236 453 2,960 9,737 1,362 9,325 Administrative expenses 13,083 1,830 14,874 35,113 4,912 37,667 Total operating expenses 16,319 2,283 17,834 44,850 6,274 46,992 Operating income (loss) 5,271 737 (774) 7,773 1,088 (13,645) Other income (expense) - Interest income 255 36 356 671 94 739 - Interest expense (2,240) (313) (2,769) (6,675) (934) (7,227) - Others income (expense), net 80 11 1,324 (792) (111) 1,369 Total other expense (1,905) (266) (1,089) (6,796) (951) (5,119) Income (loss) before provision for income taxes 3,366 471 (1,863) 977 137 (18,764) Income tax benefit 77 11 15 44 6 49 Net income (loss) 3,443 482 (1,848) 1,021 143 (18,715) Other comprehensive loss - Foreign currency translation adjustments 1 0 24 - - (2,053) Comprehensive income (loss) 3,444 482 (1,824) 1,021 143 (20,768) Income (loss) per share, Basic and diluted 12 1.05 0.15 (0.57) 0.31 0.04 (5.73) Weighted average number ordinary shares, Basic and diluted 3,265,837 3,265,837 3,265,837 3,265,837 3,265,837 3,265,837 FUWEI FILMS (HOLDINGS) CO., LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2019 AND 2018 (amounts in thousands except share and per share value) (Unaudited) The Nine-Month Period Ended September 30, 2019 2018 RMB US$ RMB Cash flow from operating activities Net income (loss) 1,021 143 (18,715) Adjustments to reconcile net loss to net cash used in operating activities - Depreciation of property, plant and equipment 33,957 4,751 33,271 - Amortization of intangible assets 400 56 400 - Deferred income taxes (44) (6) (51) - Bad debt (recovery) expense (897) (125) (132) -Inventory provision 724 101 - Changes in operating assets and liabilities - Accounts and bills receivable (72) (10) 4,682 - Inventories 1,815 254 (1,016) - Advance to suppliers (4,833) (676) (4,987) - Prepaid expenses and other current assets (155) (22) (551) - Accounts payable 393 56 2,436 - Accrued expenses and other payables 501 70 (1,031) - Advance from customers 2,447 342 6,852 - Tax payable 368 51 1,270 Net cash provided by (used in) operating activities 35,625 4,985 22,428 Cash flow from investing activities Purchases of property, plant and equipment (12,889) (1,803) (4,812) Restricted cash related to trade finance - - - Advance to suppliers - non current - - 28 Amount change in construction in progress 366 51 - Net cash used in investing activities (12,523) (1,752) (4,784) Cash flow from financing activities Principal payments of bank loans - - - Proceeds from short-term bank loans 50 7 14,950 Proceeds from related party 3,457 484 (37,472) Change in notes payable 1,400 196 23,080 Net cash provided by financing activities 4,907 687 558 Effect of foreign exchange rate changes - (261) (2,041) Net increase in cash and cash equivalent 28,009 3,659 16,161 Cash and cash equivalent At beginning of period/year 46,908 6,823 69,464 At end of period/year 74,917 10,482 85,625 SUPPLEMENTARY DISCLOSURE: Interest paid 6,675 934 7,227 Income tax paid - - - SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCIAL ACTIVITIES: Account payable for plant and equipment: 1,062 149 1,029